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UAE non-oil growth weakens while Gulf neighbours improve

Workers manufacture vehicle registration plates in Cairo, Egypt. September's PMI data showed a renewed decline across the Egyptian non-oil private sector Mahmoud Elkhwas/NurPhoto via Reuters Connect
Workers manufacture vehicle registration plates in Cairo, Egypt. September's PMI data showed a renewed decline across the Egyptian non-oil private sector
  • UAE non-oil sector weakest in three years
  • Saudi non-oil growth accelerating
  • Concerns for Turkey and Egypt

Growth in the UAE’s non-oil sector has slowed to its weakest point in three years, but activity in the Gulf countries continues to be the bright spot among survey results for economies in the Middle East.

The UAE purchasing managers’ index (PMI) from S&P Global signalled the emirate’s slowest expansion in non-oil business activity for three years at the end of the third quarter of 2024. 

The slowing growth was accompanied by a weaker upturn in new orders and softer job creation.

Businesses also raised charges at the fastest pace since September 2018, following reported increases in shipping, petrol, technology, and maintenance costs. However the rate of overall cost inflation eased to the weakest since April.

The PMI is a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy. 

In the third quarter of 2024, the UAE’s PMI dipped to 53.8 in September from 54.2 in August. While still above the 50 threshold for growth, the figure was among the lowest the UAE has reported in years.

New order growth in the UAE has softened and businesses reported fewer hires in September, driving the mildest rise in total employment since the end of 2022.

David Owen, senior economist at S&P Global Market Intelligence, said: “The UAE PMI continued to show a loss of momentum in the non-oil private sector, with growth having softened considerably since the start of the year.

“Businesses faced further challenges with the completion of new work, despite a slowing of sales growth and a strong uplift in purchases.”

Saudi Arabia

In Saudi Arabia the picture is more positive. The latest PMI figures suggest accelerating growth, with a jump from 54.8 in August to 56.3 in September. The rise was associated with sharper expansions in output and new orders, as well as a tightening of supply conditions.

After rising at one of the softest rates since early 2022 in August, output levels increased to a stronger degree in the latest period. Employment numbers rose solidly, with gains made to boost sales and reduce workloads.

Kuwait

Non-oil private sector activity in Kuwait witnessed more moderate growth, registering 50.3 on the PMI. This followed the country’s first drop into contraction in 19 months in August, when it measured 49.7.

In September, competitive pressures limited rates of expansion in new orders and output.

Despite the moderate growth, in September there was an improvement in business confidence, with 31% of respondents predicting a rise in business activity over the coming year.

Turkey

The picture is markedly more worrying in Turkey. The headline PMI dropped to 44.3 in September from 47.8 in August. That slowdown was the most pronounced since May 2020, with Turkish businesses reporting the sharpest slowdown in new orders in almost four-and-a-half years.

Output, new orders, employment, and purchasing all softened to larger degrees than in the previous survey period. Rates of inflation of both input costs and output prices eased marginally, but remained marked.

Turkey’s inflation rate sat at 49.38 percent in September 2024.

Egypt

September survey data for Egypt’s PMI showed it continues to struggle, with a renewed decline in business conditions across the Egyptian non-oil private sector at 48.8.

Output and new orders both declined at the sharpest rates since April, following the first expansion in the metric for three years in August. Survey panellists primarily linked the reduction to lower customer demand, as the pace of decline in new business accelerated to the quickest in five months.

Accelerating inflation dampened business, with producers reporting increases in raw material costs alongside currency weaknesses.

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